Home buying activity in major markets across Canada dropped steeply in the second half of March, leading to what amounted to a 14 percent decline in sales compared to February’s total.
While the strength of the first half of the month and the relative weakness of March 2019 ultimately led to a year-over-year national sales gain of 7.8 percent, the impact of the COVID-19 pandemic on Canada’s housing market is clear in the data published today by the Canadian Real Estate Association (CREA).
“March 2020 will be remembered around the planet for a long time. Canadian home sales and listings were increasing heading into what was expected to be a busy spring for Canadian REALTORS®. After Friday the 13th, everything went sideways,” said CREA President Jason Stephen in a media release accompanying the data.
The pandemic’s impact on housing activity is especially evident when comparing the relatively modest year-over-year sales gain seen in March to the near 30 percent increase recorded in February.
Although CREA published Canadian home sales data for the full month as is standard practice, the association’s Senior Economist Shaun Cathcart said the early March numbers reflect a “pre-COVID-19 reality which we are no longer in.”
“The numbers that matter most for understanding what follows are those from mid-March on, and things didn’t really start to ratchet down until week four,” Cathcart said. “Preliminary data from the first week of April suggest both sales and new listings were only about half of what would be normal for that time of year.”
As sales fell in March, CREA observed new listings declining by “similar magnitudes.” New listings dropped by 12.5 percent last month when compared to February data.
The CREA team believes that the full impact of the COVID-19 crisis on the Canadian housing market will become apparent in the months to come. While there is scant data to draw from on just how deeply affected Canadian housing will be, many industry leaders have come forward to voice confidence in the market’s ability to remain relatively stable through this challenging period.
“The impact of COVID-19 on the Canadian economy has been swift and violent, with layoffs driving high levels of unemployment across the country,” said Royal LePage CEO Phil Soper.
“While it is sad that these people skewed strongly to young and to part-time workers, for the housing industry, the impact of these presumably temporary job losses will be limited as these groups are much less likely to buy and sell real estate,” he continued.
Soper noted that evidence from past housing downturns leads him to believe that Canadian home prices will not be significantly impacted in 2020.
“Home price declines occur when the market experiences sustained low sales volume while inventory builds. Currently, the inventory of homes for sale in this country is very low, matching low sales volumes as people respect government mandates to stay at home,” he said.
